Illinois Insurance News

Whether fully insured or self-insured, unions must implement the same provisions as other grandfathered plans for plan years beginning on or after September 23, 2010. However, fully insured plans get some special treatment in the interim final grandfathering rules. The following allowances are given to collectively bargained agreements (for the life of the agreement) that were ratified before March 23, 2010:

• The plans may change carriers and remain grandfathered.
• The plans may make benefit plan changes (such as plan design) or change employer/employee organization contribution amounts and remain grandfathered.
• The interim final rules on grandfathering are silent as to whether grandfathered health insurance coverage is exempt from the anti-abuse rules.

When the last of the collectively bargained agreements expires, the special allowances end as well. From that point on, the grandfathered status of fully insured plans will be determined as it is for any other health plan.

Self-funded plans that are kept as collectively bargained agreements are treated like any other plan. For self-funded plans, whether or not they are kept as collectively bargained agreements, a change in third-party administrators will not result in the loss of grandfathered status.

If a group customer requests that we implement health care reform changes earlier or later than its renewal date because its ERISA plan year differs from the renewal date, we will honor the request.

60-day notice of plan changes

Another health care reform law provision requires plans to create a uniform summary of benefits. And any material modifications to the terms of the plan must be communicated to members 60 days before those changes go into effect. Based on our review, we believe that the 60-day notice provision will not go into effect right away; however, it must be implemented before March 23, 2012 (two years after the law was enacted). The U.S. Department of Health and Human Services will be giving us more guidance on this provision. When it does, we will let you know.

No discrimination based on compensation

Benefits cannot be based on wages

The health care reform law notes that, effective September 23, 2010, plans may not discriminate in favor of highly compensated employees. This means that group health plans cannot base eligibility or the level of benefits on an employee’s wage. The group can offer different levels of benefits as long as they comply with ERISA and are not tied to the amount an employee makes. The legislation defines a highly compensated employee is someone who is:

• One of the five highest paid officers.
• A shareholder who owns more than 10% in value of the employer’s stock.
• Among the highest paid 25% of all employees (exceptions apply).

Waiting periods

We do not believe we will need to change our approach to allowing groups to offer different waiting periods to different employee levels. The health care reform law “nondiscrimination by compensation” provision is specific to the benefit offerings of a medical plan and not the waiting periods established by a company.

Grandfathered vs. non-grandfathered plans

No matter how a plan is structured, in order for it to be a grandfathered plan, it must have been in effect when the health care reform law was passed on March 23, 2010, and no changes are made to the benefits or the benefit plan. For non-grandfathered plans, the plan sponsor of a group health plan (other than a self-insured plan) may not set up rules about health insurance coverage eligibility (including continued eligibility) for any full-time employees based on the total hourly or annual salary of the employees. Nor can the sponsor set up rules that in any way favor employees who receive more compensation.

Offering benefits only to currently eligible employees

A group can retain grandfathering status by continuing to offer benefits only to currently eligible employees (instead of all employees), as long as the benefits are not tied to how much those employees make. In addition, the health care reform law notes that the plan sponsor of a group health plan (other than a self-insured plan) may not set up rules about health insurance coverage eligibility (including continued eligibility) for any full-time employees based on the total hourly or annual salary of the employees. Nor can the sponsor set up rules that in any way favor employees who receive more compensation.

Executive physicals

Because this health care reform law provision is specific to plans and not to benefits, executive physicals (and similar benefits) are not affected.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

For 10/1/10 and later effective dates, Aetna will discontinue new business sales of child-only policies to applicants (under the age of 19) for Aetna Advantage Plans for Individuals, Families and the Self Employed. No existing policyholders are affected by this action.

Effective immediately, any applications received requesting a child-only policy with a 10/1/10 effective date (or later) will be closed. Underwriting will notify applicants by mail of their ineligibility, but also provide options for coverage – see below.

Why is Aetna making this change?
This change positions Aetna for the future so they can effectively handle upcoming changes resulting from healthcare reform (i.e. they are likely to lose money on child-only coverage). New federal rules require guaranteed issue (GI) of coverage for individuals under the age of 19 and no corresponding coverage requirement. These conditions have the potential to significantly increase the cost of premiums and make coverage unaffordable.

No impact to existing child-only policies
Existing policyholders will not be impacted by this action and they may continue their current coverage. These policies are renewable

States affected
Discontinuation of child-only coverage for the following states AK, AR, AZ, CA, CO, DC, DE, FL, GA, IL, IN, KS, KY, LA, MI, MO, MS, NC, NE, NV, PA, SC, TN, TX, VA, WV, and WY will occur on 10/1/10. The implementation date for the following states CT, MD, OH, and OK is still being established.

Other health insurance options available for individuals under age 19

• Be added as a dependent to a parent’s plan.
• If the above option is not a viable solution, applicants can check www.healthcare.gov for alternatives

Aetna continues to explore options with states where they are ceasing the sales of new child-only policies, including reviewing other regulatory changes that may allow them to re-enter this market and provide a valuable product between now and 2014, but this is highly unlikely.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: Aetna Child Policies, Aetna Children Coverage, Aetna Discontinues Child Only Policies

The temporary health benefits continuation subsidy helped some involuntarily terminated workers but came nowhere close to providing “universal coverage.”

Researchers at the Urban Institute, Washington, give that assessment in a review of the 65% federal COBRA group health continuation premium subsidy that Congress included in the in the American Recovery and Reinvestment Act (ARRA) of 2009. The subsidy expired May 31.

Before the subsidy took effect, workers had to pay 102% of the full cost of employer-sponsored health coverage to continue benefits. Now that the subsidy has expired, workers must once again pay 102% of the cost, rather than 35%.

The Urban Institute researchers say estimates of the effects of the COBRA subsidy on COBRA take-up rates vary, with Ceridian Corp., Minneapolis – a firm that manages benefits programs for a wide range of employers – reporting that take-up rates at client employers had increased to about 18%, from about 12%.

“Most of the before-and-after take-up rates presented above likely underestimate ARRA’s effects on its target population of job losers because they do not compare the same types of people before and after ARRA.

Enrollment figures from one benefits firm suggest that workers who signed up for COBRA when the subsidy was available might have been somewhat healthier than the workers who sign up for unsubsidized COBRA coverage, the researchers say.

The researchers found that federal efforts to promote the program were effective and that implementation seemed to go reasonably well, under the circumstances.

But the fact that studying the effects of the ARRA COBRA subsidy is so difficult suggests that implementing the Affordable Care Act, the health system change act that includes the Patient Protection and Affordable Care Act, might be more difficult than policymakers had expected, the researchers warn.

The COBRA subsidy program experience suggests that the secretary of the U.S. Department of Health and Human Services may have difficulty getting large amounts of new types of insurance information from employers and health benefits administrators, unless employers or administrators already are generating the data for private business purposes, the researchers say.

“Careful attention to the costs and benefits of new data requests or requirements should be paid in implementation, as it would be easy to create considerable political ‘push back’ for data elements that are not vital to effective early oversight of health plans,” the researchers say.

The COBRA subsidy program also has shown that policymakers will have to arrange for very high subsidies and very easy enrollment to enroll all or nearly all newly unemployed people, the researchers say.

“Interviewees from all perspectives agreed that even subsidized COBRA premiums are too high to help a great many potential enrollees,” the researchers say.

Even paying 35% of the full cost of health coverage is too much for many, the researchers say.

Encouraging high coverage continuation rates can help insurers as well as unemployed individuals, by minimizing the possible effects of adverse selection, the researchers say.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: COBRA Subsidy Expiration, COBRA Subsidy Reviews

As of June 1, 2010 Blue Cross and Blue Shield of Illinois (BCBSIL) is offering new Medicare Supplement Insurance Plans G and N. Members and those considering Plans G and N can enroll at anytime; there are no specific enrollment periods or deadlines. The changes to the configuration of Medicare Supplement plans are the result of the “Medicare Improvements for Patients and Providers Act of 2008” (MIPPA), which took effect on June 1.

All plans sold after June 1 have an enhanced hospice benefit, which includes coverage for some outpatient prescription medications and copayments and coinsurance for inpatient respite care, which were previously the responsibility of the insured.

These 2 plans are essentially replacing Plans D and E. Plan D is comparable to plan G but not quite as popular a plan. Plan E is a casualty of the Medicare Modernization Act of 2003 and can no longer be sold by any company. Folks who currently have Plan D or E from BCBS of IL are “grandfathered” in and can keep these plans because they are guaranteed renewable for life.
Read the rest of this entry »»

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: BCBSIL Plan G, BCBSIL Plan N, Blue Cross and Blue Shield of Illinois New Medicare Supplement Plans, Blue Cross Blue Shield Illinois 2010 Medicare Plans 2010

On May 24, 2010, the Internal Revenue Service (IRS) issued inflation-adjusted limits for contributions to a health savings account (HSA) for calendar year 2011 (Revenue Procedure 2010-22). Under cost-of-living adjustment rules of Code section 223, the annual limits for 2011 remain unchanged from 2010 because the changes in the consumer price index for the relevant period do not result in changes to the amounts for 2011.

Therefore, for calendar year 2011, the limit on contributions for an individual with self-only coverage under a high-deductible health plan is:

• $3,050 for individual coverage
• $6,150 for family coverage

A high-deductible health plan for calendar year 2011 is defined as a health plan with an annual deductible of not less than $1,200 for self-only coverage ($2,400 for family coverage). The limit on annual out-of-pocket expenses is $5,950 for self-only coverage ($11,900 for family coverage). The limit on catch-up contributions for individuals age 55 or older is $1,000.

Read the full text of Revenue Procedure 2010-22.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: 2011 Health Savings Account Amounts, 2011 HSA Contributions, IRS HSA Limits 2011

The Internal Revenue Service has come out with guidelines for small commercial and nonprofit employers that want to take advantage of a new health insurance tax break.

The small employer health insurance tax credit guidelines, given in IRS Notice 2010-44, include examples that can help employers and their benefits advisors determine whether the employers are eligible for the tax break, and exactly how much of the new federal health insurance tax credit the employers can claim.

Calculating exactly how small an employer is for tax credit purposes will depend partly on the definition of “full-time equivalent” employee, officials write in the notice.

“In general, employees who perform services for the employer during the taxable year are taken into account in determining the employer’s FTEs, average wages, and premiums paid,” officials write.

But “partners in a business and certain owners are not taken into account as employees,” officials write. “Specifically, sole proprietors, partners in a partnership, shareholders owning more than 2% of an S corporation.

Owners and partners need not count family members or other dependents who are members of their households as employees when they are trying to qualify for the tax credit.

IRS officials devote another section to computing workers’ hours.

The IRS issued the notice to implement a new tax law, Section 45R of the Internal Revenue Code, which was added by Section 1421 of the new Patient Protection and Affordable Care Act.

PPACA and a companion act, the Health Care and Education Reconciliation Act, are part of what federal agencies have dubbed the Affordable Care Act.

This year, the new ACA small business tax break will offer small employers a tax credit equal to at least half the cost of single coverage, if the employees earn average wages of less than $50,000 per year.

The tax credit is not available to ordinary government employers, but it is available to small businesses, small tax-exempt employers, and government-affiliated tax-exempt employers that can be described as section 501(c) organizations.

“For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible small business employers and 25% of premiums paid by eligible employers that are tax-exempt organizations,” officials write in a summary of the notice.

Employers with 10 or fewer FTE employees that pay annual average wages of $25,000 or less can qualify for the maximum credit.

Employers with 10 to 25 FTE employees that pay annual wages of $50,000 or less can qualify for a smaller tax credit.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: IRS Small Business Health Insurance Tax Credit Examples, IRS Small Business Tax Credits

Federal agencies are rushing young adult dependent coverage interim final rules into effect without going through the usual comment period.

The Employee Benefits Security Administration, an arm of the U.S. Department of Labor, has posted a preliminary version of the interim final rules on its website.

The Internal Revenue Service, an arm of the U.S. Treasury Department, and the Office of Consumer Information and Insurance Oversight at the U.S. Department of Health and Human Services also worked on the rules.

The agencies are set to publish the final version of the interim rules in the Federal Register Thursday.

The rules implement a provision in the new federal Affordable Care Act — the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act — that requires insurers to let insured parents keep children on the parents’ health coverage until the children are 26.

The ACA young adult coverage provision is set to take effect Sept. 23, but most major carriers say they will implement the provision earlier.

Federal agencies normally provide time for members of the public to comment before implementing major regulations. The agencies are implementing the young adult coverage interim rules before the comments come in because the secretary of Labor, HHS and the Treasury “have determined that it would be impracticable and contrary to the public interest to delay putting the provisions in these interim final regulations in place,” officials write in a preamble to the interim rules. “Having a binding rule in effect is critical to ensuring that individuals entitled to the new protections being implemented have these protections uniformly applied.”

Officials are estimating that, in 2011, the program will lead to about 1.2 million young adults having new health coverage, and that about 650,000 of those young adults will be people who were previously uninsured.

The number of uninsured young adults who gain coverage through the program in 2011 could range from 200,000 to about 1.6 million, officials estimate.

Although officials use the term “dependent” in connection with the regulation, group health plans can no longer use factors such as whether a child of an insured is a tax dependent in deciding whether to issue coverage to that child, officials write.

“Examples of factors that cannot be used for defining dependent for purposes of eligibility (or continued eligibility) include financial dependency on the participant or primary subscriber (or any other person), residency with the participant or primary subscriber (or any other person), student status, employment, eligibility for other coverage, or any combination of these,” officials write.

Implementing the young adult coverage program will require that the children who were denied coverage, or whose coverage ended, receive alerts about the new enrollment opportunity, officials write.

Federal agencies want to hear ideas about ways to minimize the burden on the notice senders and on the individuals who must fill out the notices, officials write.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: Dependent Care Regulations, Dependent Health Insurance to Age 26 Update, Health Insurance Dependent Care Law Regulation, Insurance Age 26 Law

As a result of changes made by the recently enacted Affordable Care Act, health coverage provided for an employee’s children under 27 years of age is now generally tax-free to the employee, effective March 30, 2010.

The Internal Revenue Service announced today that these changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit.

IRS Notice 2010-38 explains these changes and provides further guidance to employers, employees, health insurers and other interested taxpayers.

“These changes give employers a unique opportunity to offer a worthwhile benefit to their employees,” IRS Commissioner Doug Shulman said. “We want to make it as easy as possible for employers to quickly implement this change and extend health coverage on a tax-favored basis to older children of their employees.”

This expanded health care tax benefit applies to various workplace and retiree health plans. It also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return.

Employees who have children who will not have reached age 27 by the end of the year are eligible for the new tax benefit from March 30, 2010, forward, if the children are already covered under the employer’s plan or are added to the employer’s plan at any time. For this purpose, a child includes a son, daughter, stepchild, adopted child or eligible foster child. This new age 27 standard replaces the lower age limits that applied under prior tax law, as well as the requirement that a child generally qualify as a dependent for tax purposes.

The notice says that employers with cafeteria plans may permit employees to immediately make pre-tax salary reduction contributions to provide coverage for children under age 27, even if the cafeteria plan has not yet been amended to cover these individuals. Plan sponsors then have until the end of 2010 to amend their cafeteria plan language to incorporate this change.

In addition to changing the tax rules as described above, the Affordable Care Act also requires plans that provide dependent coverage of children to continue to make the coverage available for an adult child until the child turns age 26. The extended coverage must be provided not later than plan years beginning on or after Sept. 23, 2010. The favorable tax treatment described in the notice applies to that extended coverage.

Information on other health care provisions can be found on this website, IRS.gov.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: Affordable Care Act - Dependent IRS Tax Guidelines, Affordable Care Act IRS Tax Guidelines, Tax-Free Employer Provide Health Coverage, Tax-Free Employer Provide Health Coverags IRS Guidelines

The IRS recently released materials for those wishing to claim the small business health care tax credit for 2010. A provision of the Patient Protection and Affordable Care Act (PPACA), this tax credit is designed to encourage small groups to offer health care coverage for the first time or enable them to maintain the coverage they already have. It will likely provide assistance to about four million small businesses.

This tax credit can be significant for a qualifying small group. In 2010, the maximum credit is 35% of employer-paid premiums; for tax-exempt organizations, the maximum is 25% of employer-paid premiums. In 2014, the maximum increases to 50% of employer-paid premiums; for tax-exempt organizations, it increases to 35% of employer-paid premiums. In order to qualify for the credit, the employer must not employ more than 25 employees and the average annual compensation of those employees must not exceed $50,000.

Small Business Healthcare Tax Credit Eligibility Rules:

• Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate
• Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
• Average annual wage. A qualifying employer must pay average annual wages below $50,000.
• Both taxable (for profit) and tax-exempt firms qualify.

Here’s a look at how a company with 10 employees could benefit:

• Employees: 10
• Wages: $250,000 or $25,000 per worker
• Employer Health Care Costs: $70,000

2010 tax credit: $24,500 (35% credit)
2014 tax credit: $35,000 (50% credit)

---

Example 2: Downtown Diner – Restaurant with 40  Part-Time Employees

• Employees: 40 half-time (equivalent of 20 full-time)
• Wages: $500,000 or $25,000 per full-time equivalent worker
• Employer Health Care Costs: $240,000

2010 Tax Credit: $28,000 (35% credit with phase-out)
2014 Tax Credit: $40,000 (50% credit with phase-out)

---

Example 3: 1st Street Family Services – Foster Care Non-Profit with 9 Employees

• Employees: 9
• Wages: $198,000 or $22,000 per worker
• Employer Health Care Costs: $72,000

2010 Tax Credit: $18,000 (25% credit)
2014 Tax Credit: $25,200 (35% credit)

---

Example 4: Acme Air Conditioning, LLC- Manufacturing Company with 12 Employees

• Employees: 12
• Wages: $420,000 or $35,000 per full-time equivalent worker
• Employer Health Care Costs: $90,000

2010 Tax Credit: $14,700 (35% credit with phase-out)
2014 Tax Credit: $21,000 (50% credit with phase-out)

While there is no formal guidance yet, the IRS has provided educational resources for small businesses wishing to claim the credit this year. Click here to see the following information:

• Eligibility rules
• Amount of credit
• Three simple step to determine a small group’s eligibility
• More tax credit scenarios
• FAQs

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: 2010 Health Insurance Tax Credits for Small Business, 2010 Small Business Health Insurance Tax Credits, 2010 Small Business Tax Credit Eligibility, 2010 Small Business Tax Credits, Small Business Eligible for Healthcare Tax Credits, What businesses are eligibile for 2010 health care tax credit

The new health reform law is the most far-reaching health legislation since the creation of the Medicare and Medicaid programs.

The following is a look at the impact of the law, which will extend insurance coverage to 32 million additional Americans by 2019, but which will also have an effect on almost every citizen.

Here are some commonly-asked questions about how you might be affected:

Q: I don’t have health insurance. Will I have to get it, and what happens if I don’t?

A: Under the legislation, most Americans will have to have insurance by 2014 or pay a penalty. The penalty would start at $95, or up to 1 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. This is the individual limit; families have a limit of $2,085 or 2.5 percent of household income, whichever is greater. Some people can be exempted from the insurance requirement, called an individual mandate, because of financial hardship or religious beliefs or if they are American Indians, for example.

Q: I already have insurance through my job. Is this plan going to cost me more?

No, if you have coverage you already like and you see providers you like, nothing should change for you. Premium prices should not change, and in fact, there are subsidies for people who struggle to pay their premiums in Massachusetts that will be increased under federal reform.

Your existing health premiums, your doctor and your hospital will not be affected by this law. But that said, if your employer decides to go with a different insurer or HMO, or decides to offer a more restricted network at a lower premium or a wider network at a higher premium, you might be forced to change doctors or hospitals.

Q: I’m a small business owner; Do I now have to buy insurance for all my employees like they require in Massachusetts- what’s the difference between the state plan and the federal plan?

There’s really good news for small business owners. We know they struggle to pay for health care coverage for their employees and we know they want to be able provide health insurance for their employees. Under the federal bill, if you’re a small employer with 50 or fewer employees, you will qualify for a 35% tax credit on the money that you spend to pay for people’s health benefits.

If you’re a business in Massachusetts with 11 or more workers and you don’t provide health insurance, you have to pay an assessment of little under $300 a year or $25 dollars a month… The federal plan applies to employers with 50 or more workers, but the financial pressures are stronger.

Q: I want health insurance, but I can’t afford it. What do I do?

A: Depending on your income, you might be eligible for Medicaid, the state-federal program for the poor and disabled, which will be expanded sharply beginning in 2014. Low-income adults, including those without children, will be eligible, as long as their incomes didn’t exceed 133 percent of the federal poverty level, or $14,404 for individuals and $29,326 for a family of four, according to current poverty guidelines.

Q: What if I make too much for Medicaid but still can’t afford coverage?

A: You might be eligible for government subsidies to help you pay for private insurance that would be sold in the new state-based insurance marketplaces, called exchanges, slated to begin operation in 2014.

Premium subsidies will be available for individuals and families with incomes between 133 percent and 400 percent of the poverty level, or $14,404 to $43,320 for individuals and $29,326 to $88,200 for a family of four.

The subsidies will be on a sliding scale. For example, a family of four earning 150 percent of the poverty level, or $33,075 a year, will have to pay 4 percent of its income, or $1,323, on premiums. A family with income of 400 percent of the poverty level will have to pay 9.5 percent, or $8,379.

In addition, if your income is below 400 percent of the poverty level, your out-of-pocket health expenses will be limited.

Q: How will the legislation affect the kind of insurance I can buy? Will it make it easier for me to get coverage, even if I have health problems?

A: If you have a medical condition, the law will make it easier for you to get coverage; insurers will be barred from rejecting applicants based on health status once the exchanges are operating in 2014.

In the meantime, the law will create a temporary high-risk insurance pool for people with medical problems who have been rejected by insurers and have been uninsured at least six months. This will occur this year.

Starting later this year, insurers can no longer exclude coverage for specific medical problems for children with pre-existing conditions nor deny coverage to children with pre-existing illnesses.

Insurers later this year will also be barred from setting lifetime coverage limits for adults and kids. In 2014, annual limits on coverage will be banned.

New policies sold on the exchanges will be required to cover a range of benefits, including hospitalizations, doctor visits, prescription drugs, maternity care and certain preventive tests.

Q: How will the legislation affect young adults?

A: If you’re an adult younger than 26, you’ll be able to stay on your parent’s insurance coverage as long as you are not offered health coverage at work. This provision officially takes effect in September, but insurers may not have to comply until the beginning of a new health plan year – which often happens in January.

In addition, people in their 20s will be given the option starting in 2014 of buying a “catastrophic” plan that will have lower premiums. The coverage will largely only kick in after the individual has $6,000 in out-of-pocket expenses

Q: I own a small business. Will I have to buy insurance for my workers? What help can I get?

A: It depends on the size of your firm. Companies with fewer than 50 workers won’t face any penalties if they don’t didn’t offer insurance.

Companies can get tax credits to help buy insurance if they have 25 or fewer employees and a workforce with an average wage of up to $50,000. Tax credits of up to 35 percent of the cost of premiums will be available this year and will reach 50 percent in 2014. The full credits are for the smallest firms with low-wage workers; the subsidies shrink as companies’ workforces and average wages rise.

Firms with more than 50 employees that do not offer coverage will have to pay a fee of up to $2,000 per full-time employee if any of their workers get government-subsidized insurance coverage in the exchanges. The first 30 workers will be excluded from the assessment.

Q: I’m over 65. How will the legislation affect seniors?

A: The Medicare prescription-drug benefit will be improved substantially. This year, seniors who enter the Part D coverage gap, known as the “doughnut hole,” will get $250 to help pay for their medications.

Beyond that, drug company discounts on brand-name drugs and federal subsidies and discounts for all drugs will gradually reduce the gap, eliminating it by 2020. That means that seniors, who now pay 100 percent of their drug costs once they hit the doughnut hole, will pay 25 percent. Beginning in 2011, drug companies will be required to give a 50 percent discount on brand-name drugs for prescriptions filled in the doughnut hole.

And, as under current law, once seniors spend a certain amount on medications, they will get “catastrophic” coverage and pay only 5 percent of the cost of their medications.

Meanwhile, government payments to Medicare Advantage, the private-plan part of Medicare, will be frozen starting in 2011, and cut in the following years. If you’re one of the 10 million enrollees, you could lose extra benefits that many of the plans offer, such as free eyeglasses, hearing aids and gym memberships. To cushion the blow to beneficiaries, the cuts to health plans in high-cost areas of the country such as New York City and South Florida — where seniors have enjoyed the richest benefits — will be phased in over as many as seven years.

Beginning this year, the law will make all Medicare preventive services, such as screenings for colon, prostate and breast cancer, free to beneficiaries.

Q: How much is all this going to cost? Will it increase my taxes?

A: The package is estimated to cost $938 billion over a decade. But because of higher taxes and fees and billions of dollars in Medicare payment cuts to providers, the package will narrow the federal budget deficit by $143 billion over 10 years, according to the Congressional Budget Office.

If you have a high income, you will face higher taxes. Starting in 2013, individuals with earnings over $200,000 and married couples earning more than $250,000 will pay a Medicare payroll tax of 2.35 percent, up from the current 1.45 percent. In addition, high-income taxpayers will face a 3.8 percent tax on unearned income such as dividends and interest over the threshold.

Starting in 2018, the law will also impose a 40 percent excise tax on the portion of most employer-sponsored health coverage (excluding dental and vision) that exceeds $10,200 a year for individuals and $27,500 for families. The tax is often referred to as a “Cadillac” tax.

The law also will raise the threshold for deducting unreimbursed medical expenses from 7.5 percent of adjusted gross income to 10 percent.

The law also will limit the amount of money you can put in a flexible spending account to pay medical expenses to $2,500 starting in 2013. Those using an indoor tanning salon will pay a 10 percent tax starting this year.

Q: Under the new law, do pre‐existing conditions no longer matter?

Effective September 23, 2010, insurance companies cannot limit coverage for children on individual or group policies with pre‐existing medical conditions. For adults with individual policies, this provision goes into effect in 2014.

Q: Are there annual or lifetime maximums on coverage under the new law?

Effective September 23, 2010, there are no lifetime maximum limits on coverage. In addition, there will be no annual limits on group plans. For individual plans, annual limits may be allowed based on what Health and Human Services deems reasonable. This information is not yet available.

Q:Under health care reform, what happens to rescission?

Effective September 23, 2010, rescissions will occur only in cases of customer fraud or intentional misrepresentation.

Q: Is it true that anyone who applies for coverage will be issued coverage?

Under the Guarantee Issue provision, effective in 2014, anyone who applies for coverage must be issued coverage.

Q: What will happen to my premiums?

A: That’s hard to predict and the subject of much debate. People who are sick might face lower premiums than otherwise because insurers won’t be permitted to charge sick people more; healthier people might pay more. Older people could still be charged more than younger people, but no more than three times as much.

The bigger question is what happens to rising medical costs, which drive up premiums. Even proponents acknowledge that efforts in the legislation to control health costs, such as a new board to oversee Medicare spending, won’t have much of an effect for several years.

Q: I have children in my 20s who can’t afford their own insurance. Does this new plan help them?

The national bill will extend health care benefits to young people up to the age of 26. We know that will bring peace of mind for both parents and young people who have not yet landed in the job market and been able to get their own health benefits.

The federal law has a provision similar to the one in Massachusetts. If a family has children under age 26, they can be covered under the family policy and this is an enormous benefit.

Q: What is the “Insurance Exchange”?

The insurance exchange will work in other states a little like the Massachusetts Insurance Connector works. They certify different insurance policies that can be purchased by small employers or individuals. The idea is each of the four different levels of insurance coverage would have different premiums but standard benefits.

The Insurance Exchange is built on some of the work we’ve already done here in Massachusetts. We have the Health Connector Authority which allows individuals and small businesses to go and competitively shop for their health insurance coverage. Exchanges will be available around the country.

Q: If I lose my job, can I keep my same insurance?

You can. There actually is a provision that will allow some assistance for maintaining your COBRA benefits. In Massachusetts, if you are somebody who has lost their job but wants to continue with the same insurance you have, you’ll receive a subsidy to help you pay for that COBRA coverage.

Q: Will it impact our taxes?

The Congressional Budget Office says the federal deficit drops by over $100 billion over the coming decade. For a small percentage of people who are highly compensated who make more than $200,000 a year, their Medicare taxes will go up less than one percent. For the rest of us, it will be the same.

Tweet This Post Buzz This Post Digg This Post Stumble This Post

Tags: Health Care Reform - What it Means for You, Health Care Reform Common Questions, Health Care Reform Frequently Asked Questions, Healthcare Reform 2014 Changes, Healthcare Reform Common Concers, Healthcare Reform FAQ, Healthcare Reform Law Common Questions